FMV Calculation Under Draft Income Tax Rules 2026

Taxation

Last updated: Jun 16, 2026

3 min read

by Team Axis Bank

If you have ever wondered how the Income Tax Department decides the value of your jewellery, art, or property for tax purposes, the new draft Income‑Tax Rules, 2026 would answer your question.

These rules will become official on April 1, 2026. They are meant to make it easier to determine an assets value and reduce ambiguity. No more worrying about "how much is my gold really worth?"

Why are the rules changing?

The existing rules are… let’s just say, vintage. Many of them date back decades and use language even lawyers sometimes struggle to decode. The 2026 draft rules are designed to:

Make things simpler and clearer for taxpayers.
Remove old redundancies that caused confusion.
Give the government a standard way to calculate the fair market value (FMV) of assets.

The main goal is to make valuations more consistent and reduce disagreements. This will benefit both taxpayers and the government.

Rule 57: The heart of asset valuation

At the center of this update is Rule 57, which tells us how to determine the fair market value of assets. The FMV is important because it affects capital gains, gift taxes, and other valuation-linked provisions.

In simple terms, it’s about figuring out what your asset would realistically sell for if you put it on the market, instead of just relying on what you paid for it years ago.

Jewellery: gold, diamonds, and bling

Here’s the breakdown for jewellery owners:

Market price approach: If you were to sell your jewellery today, the FMV is basically what someone would pay on the open market.
Invoice-based: Bought it recently from a registered dealer? The purchase invoice can act as the FMV.
Valuer’s report: Got it as a gift, inheritance, or some other way and its value exceeds ac certain threshhold? You might need a certified valuation report from a professional.

This method makes sure everyone’s on the same page and prevents wild estimates.

Art, collectibles, and antiques

The logic for art and collectibles is very similar:

Check the open market value first.
If you bought it from a registered dealer, use the invoice price.
Otherwise, if the value is significant, get a professional valuation.

It’s a practical approach, since art and antiques can vary in price depending on rarity, demand, and collectors' whims.

Property: land and buildings

For immovable property, the draft rules suggest uses the stamp duty value assessed by government authorities as the benchmark for fair market value.

This is a much more accurate way to determine what the market will pay on any given day, and it ensures everyone uses the same number, whether they are a taxpayer or a department employee.

Why does it matter?

Getting the FMV right is crucial because it impacts:

Gifts: The FMV determines tax liability if you receive high-value gifts.
Capital gains: In certain cases, capital gains or taxable income may be computed using FMV as a reference point
Estate planning: Helps in proper reporting and compliance when assets change hands.

In short, it’s about fairness and clarity, not making life complicated for taxpayers.

Also Read: 9 Best Tax Saving Investment Options For You

Conclusion

Rule 57 is a step toward predictable and transparent asset valuations. The draft rules want to cut down on disagreements, confusion, and guesswork by making it clear how to value jewellery, art, and property, such as by market price, invoices, or professional appraisals. Think of it as finally having a price tag on your bling that the taxman and you can both agree on.

Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.